The purpose of this memo is to inform you of the employer paid fringe benefits rates for fiscal year (FY) 2026.
A description of how each of the FY 2026 benefits will be charged is provided below, and a more detailed breakdown of the employer paid fringe benefits is provided in the table found here: Memorandum: Fiscal Year 2026 Employer Paid Fringe Benefits
As a reminder, all employer paid fringe benefits are incorporated in the Statewide Payroll System (SPS), except for Worker’s Compensation benefits. Worker’s Compensation is billed annually to each agency by the Injured Workers’ Insurance Fund.
- Retirement/Pension Subsidy – New rates are provided for most State Systems. New rates will be implemented pay period ending July 8, 2025, for the Regular system and pay period ending July 12, 2025, for the University system.
- Match of Employee Contributions to the Maryland Supplemental Retirement Plans (MSRP) [457, 403 (b) and 401 (k)] – This benefit includes a dollar-for-dollar match for qualifying MSRP participants, up to $600 for FY 2026. The following requirements must be met in order for an employee to receive this benefit.
- Membership in the State Employees’ Alternate Pension system (ST EMP ALT PEN) must be noted on the employees’ pay stubs
- The employee must actively participate in one of the three Supplemental retirement plans, which are identified by Deduction Codes 39(DEF COMP), 99(403-B TSA PLAN), BP(401-K SAVE), BF(ROTH-457) and BG(ROTH-401K) – all sponsored by the Maryland Supplemental Retirement Plans and administered by Nationwide.
- Employees working at institutions of higher education and meet the previous two requirements by being a participant in one or more Deduction Codes, such as BS(TIAA-457B); 40(TIAA-403B); 70(FDLTY-457B); 68(FDLTY-403B); BH(ROTH-403BTIAA); BI(ROTH 403B-FIDELITY) in lieu of or in combination with one or more Nationwide administered plans.
- One employee can have several “SRA” deductions. However, the sum of all the match deductions in all state employment for FY 2026 cannot exceed $600.00. See page 8 for additional information.
- Unemployment Insurance Premium – The rate for FY 2026 will be 0.28%. Unemployment Insurance Wages exclude cafeteria plans, dependent and health care plans, and parking deductions.
- FICA (Social Security and Medicare) – The rate is unchanged through calendar year 2025.
- Medicare Insurance Subsidy – The rate is unchanged through calendar year 2025.
- Health Insurance Subsidies – These rates will not be updated until January 1, 2026.
- Special Subsidy – The rate for FY 2026 will be 30.92%. The Special Subsidy (i.e. retiree health subsidy) will appear on each Agency total page of the payroll and check register, the cost tape and subsequent R*STARS transactions. It will not appear on the employee’s earnings statement (pay stub).
- Other Post-Employment Benefits (OPEB) – This subsidy is not funded in FY 2026
Unless otherwise noted in the descriptions above, FY 2026 fringe benefits will become effective on July 16, 2025, (PPE July 8, 2025) for employees in the regular system, and July 18, 2025, (PPE July 12, 2025) for employees in the University system.
Click here to review the entire memo and deduction tables.